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03.04.10.00.htm 03.04.10.00. Title 03 COMPTROLLER OF THE TREASURY Subtitle 04 INCOME TAX Chapter 10 Maryland Research and Development Tax Credit Authority: Tax-General Article, §2-103 and 10-721, Annotated Code of Maryland
03.04.10.01.htm 03.04.10.01. 01 Definitions.. A. In this chapter, the following terms have the meanings indicated.. B. Terms Defined.. 1) "Basic credit" means the research and development tax credit described in Regulation .02C(1) of this chapter.2) "Business entity" means a sole proprietorship, partnership, corporation, or other entity doing business in the State.3) "Credit year" means the year for which the credit is being claimed.. 4) "Department" means the Department of Commerce.. 5) "Growth credit" means
03.04.10.02.htm 03.04.10.02. 02 Calculation of Credit.. A. The Maryland base percentage is:. 1) The percentage that the Maryland qualified research and development expense for the 4 taxable years immediately preceding the taxable year in which the expense is incurred is of the business entity's Maryland gross receipts for those years; or2) For a business entity that has fewer than 4 but at least 1 taxable year, the percentage as determined under §A(1) of this regulation using the number of immediately precedi
03.04.10.03.htm 03.04.10.03. 03 Calculation of Credit for Partial or Short Tax Year.. A. The Maryland adjusted base amount for a partial or short year taxpayer is the Maryland base amount multiplied by a fraction:1) The numerator of which is the number of days in the calendar year included in the partial or short tax year; and2) The denominator of which is 365.. B. The Maryland qualified research and development expenses for a partial year taxpayer are:. 1) The actual Maryland qualified research and deve
03.04.10.04.htm 03.04.10.04. 04 Maximum Annual Credits.. A. Except as provided in §D of this regulation, the total amount of basic credits approved by the Department under Regulations .02C(1) and .03C(1) of this chapter may not exceed $4,000,000 for any calendar year.B. For any calendar year, if the total amount of basic credits applied for by all business entities is less than $4,000,000, the maximum growth credit specified under §C of this regulation shall be increased for that calendar
03.04.10.05.htm 03.04.10.05. 05 Application for Credit.. A. Application. By September 15 of the calendar year following the end of the taxable year in which the Maryland qualified research and development expenses were incurred, a business entity shall submit to the Department a completed application for certification on the form prescribed by the Department. The business entity shall provide the following information:1) The business entity's name and address;.
03.04.10.06.htm 03.04.10.06. 06 Certification of Credit.. A. The Department shall certify to the taxpayer the amount of the basic and growth research and development tax credits approved by the Department for the taxpayer. The Department shall issue this certification by December 15 of the calendar year following the end of the taxable year in which the Maryland qualified research and development expenses were incurred.B. If the total amount of the credits applied for by all business entities
03.04.10.07.htm 03.04.10.07. 07 Claiming the Credit.. To claim the credits approved by the Department, a taxpayer shall:. A. File an amended income tax return for the taxable year in which the Maryland qualified research and development expense was incurred; andB. Attach a copy of the Department's certification to the amended income tax return..
03.04.10.08.htm 03.04.10.08. 08 Carryover of Tax Credits.. A. Except as provided in §C of this regulation, if the credit allowed in any taxable year exceeds the State income tax for that taxable year, a taxpayer may apply the excess as a credit against the State income tax for succeeding taxable years until the earlier of:1) The full amount of the excess is used;. 2) For credits certified by the Department before July 1, 2005, the expiration of the 15th taxable year after the taxable yea
03.04.10.09.htm 03.04.10.09. 09 Affiliated Corporations and Entities Under Common Control.. A. All members of the same controlled group of corporations, as defined in §41(f) of the Internal Revenue Code, and all entities under common control, whether incorporated or not, shall be treated as a single taxpayer for purposes of these tax credits.B. The credits allowable to each member shall be determined by multiplying the total credits certified by the Department for the controlled group by a fraction:
03.04.10.10.htm 03.04.10.10. 10 Mergers and Acquisitions.. A. In determining the carryover of unused credits and the effect of a merger or acquisition, federal law shall be applied to the corporations as if they were separate corporations. Any provisions under federal law that would allow separate corporations that are merged or acquired to carry forward unused credits on the surviving corporation's returns shall apply to the carryover of this credit for State purposes.B. Unused Credits..
03.04.10.11.htm 03.04.10.11. 11 Short Taxable Years.. A. Eligible Expenses. A taxpayer may only claim the credit for Maryland qualified research and development expenses incurred during its taxable year. If the business entity has a short taxable year, only the Maryland qualified research and development expenses incurred during the short taxable year are allowed on the short year return.B. If the taxpayer incurs Maryland qualified research and development expenses in 2 taxable years during a calendar year, one
03.04.10.12.htm 03.04.10.12. 12 Addition Modifications.. A. Individuals. To the extent an individual is allowed a credit on the Maryland individual income tax return under Regulation .05 of this chapter, the amount of the credit claimed shall be added to federal adjusted gross income to calculate the individual's Maryland adjusted gross income.B. Corporations. To the extent a corporation is allowed a credit on its Maryland income tax return under Regulation .05 of this chapter, the amount of
03.04.10.13.htm 03.04.10.13. 13 Partnerships, S Corporations, Limited Liability Companies, Business Trusts, Estates, and Trusts.. A. Partnerships, S Corporations, Limited Liability Companies, and Business Trusts. In the case of a subchapter S corporation, partnership, limited liability company, or business trust, the amount of the credits computed for the pass-through entity shall be allocated among the owners as agreed to in writing by the owners. If there is no written agreement governing the alloc
03.04.10.14.htm 03.04.10.14. 14 Continuity if Federal Provisions Repealed or Terminate.. If the provisions of §41 of the Internal Revenue Code governing the federal research and development tax credit are repealed or terminate, the provisions of this chapter shall continue to operate as if the provisions of §41 of the Internal Revenue Code remain in effect, and the Maryland research and development tax credit under this chapter shall continue to be available.
03.04.10.9999.htm 03.04.10.9999. Administrative History Effective date: March 4, 2002 (29:4 Md. R. 416). Regulation .01B amended effective March 31, 2014 (41:6 Md. R. 377). Regulation .04 amended effective March 31, 2014 (41:6 Md. R. 377). Regulation .08A amended effective October 9, 2006 (33:20 Md. R. 1613) March 31, 2014 (41:6 Md. R. 377)Regulation .08C adopted effective March 31, 2014 (41:6 Md. R. 377). Regulation .13C amended effective March 21, 2011 (38:6 Md. R. 393).
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